Discussion on Thomas Philippon's paper on TFP growth being linear

By Arjun Yadav @ 2022-04-30T13:17 (+40)

Note: This post was written quite quickly and I'm not well versed in this subject matter.

Thomas' paper here and Dylan Matthews' excellent write-up on it here.

I would love to spark some discussion on this: total factor productivity growth being linear in many developed countries, not exponential, could potentially be very scary.

Of course, as Dylan mentioned, TFP has issues. I believe the main critique is that, due to its simplicity, it can sometimes remain the same even after changes in technology and productivity.

MichaelStJules @ 2022-05-01T08:12 (+4)

I think TFP should have a constant upper bound due to physical limits, but maybe we're unlikely to get anywhere near it in practice; I wouldn't know.

Separately, capital and labour growth are limited by exploring and exploiting space at a cubic rate, bounded by the speed of light in all directions.

So, growth is bounded above by a cubic function, assuming our current understanding of physics.

Arjun Yadav @ 2022-05-01T11:52 (+1)

Good point! Though I think it shouldn't be difficult to figure out a lower upper bound, maybe an economist is working on that right now, depending on how actively researched this domain is.

Lukas_Finnveden @ 2022-05-09T18:45 (+3)

There's an excellent critique of that paper on LW: https://www.lesswrong.com/posts/yWCszqSCzoWTZCacN/report-likelihood-ratios

The conclusion is that exponentials look better for longer-run trends, if you do fair comparisons. And that linear being a better fit than exponentials in recent data is more about the error-model than the growth-model, so it shouldn't be a big update against exponential growth.

Arjun Yadav @ 2022-05-10T13:26 (+1)

Great post! I was mainly concerned with the -values heading haha. I wonder if Thomas Philippon will follow up on all of the attention his paper received.